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Spokane County Begins Planning for 2025 Budget;  positions and discretionary spending can be reduced

Spokane County Begins Planning for 2025 Budget; positions and discretionary spending can be reduced

Spokane County Begins Planning for 2025 Budget;  positions and discretionary spending can be reduced

Buyers, homebuyers and developers are spending less money in Spokane County this year than expected, meaning the county may need to cut some positions and expenses to balance its budget as sales tax collections slow .

Spokane County is in the early stages of the 2025 budget process. Starting Monday, each department will begin developing their individual budgets for review by county commissioners in September. A final budget will be adopted on December 2.

The 2024 budget totaled $937 million, up $64 million from 2023. Sales, real estate and property taxes, which the county is allowed to raise 1 percent annually under state law, are the functions main source of funding for the county government.

When county commissioners adopted their 2024 budget, it was based on projections that sales tax revenue would increase by 2 percent. So far, receipts have grown to about half of what was expected this year.

The county forecast that sales declines will continue next year, with no year-over-year growth expected.

In a letter sent to county department heads and elected officials this week that laid out guidelines for those leaders to begin the budget process, commissioners warned that full-time vacancies would be cut early in the budget process.

The county departments with the most vacancies are the Spokane County Sheriff’s Office, with about 35, followed by Detention Services and Juvenile Detention Services, said Randy Bischoff, senior director of finance and administration.

But that doesn’t mean those positions will remain dissolved. Bischoff said it’s more of a starting point to make sure the county is operating within its means.

“We send a letter every year to the departments saying it’s budget time and setting the ground rules,” Bischoff said.

Also in the budget guidance letter was a request for departments to identify and propose cost-saving measures and focus on potential reductions in discretionary spending on things like travel, industry conferences and office supplies.

“Although it’s not a difficult situation, we have to be careful,” Bischoff said.

In addition to no growth forecast for sales tax collections in 2025, the county will also have to deal with expected wage increases and inflation. Personnel is the largest expense for the county, and those costs increase 7.5 percent each year when factoring in step increases and cost-of-living contract adjustments, according to the letter.

“It is not possible for us to continue to operate exactly as we do today,” the letter said. “Rising staff costs, inflation and the need to maintain adequate reserves add to the cost of doing business.”

The county expects to see minimal growth in its general fund in 2025, despite the projected lack of sales tax increases.

Patrick Jones, executive director of the Institute for Public Policy and Economic Analysis at Eastern Washington University, said the county’s outlook could change by the time county commissioners are ready to approve the 2025 budget.

State figures forecast more activity in the second half of this year and early next year, Jones said.

Jones said other jurisdictions across the country and within the state are facing similar issues when it comes to post-pandemic budgeting, but noted that state revenues are still expected to grow year over year.

“During the pandemic, we experienced these double-digit increases in taxable retail sales and property taxes and things like that, and that was obviously unsustainable,” Jones said.

He said a weakening housing market, less construction earlier in the year and auto sales could contribute to weak sales tax growth.

“I think this is the hangover, in part, from the pandemic injections into the economy,” Jones said.